Exhibit 10.40


 


EMPLOYMENT AGREEMENT


 


	
  THIS EMPLOYMENT AGREEMENT is entered into
  as of the 17th
  day of April, 2008, by and between SEALY CORPORATION,
  a Delaware corporation (the “Company”), and the Employee (as defined below).

  
	
   

  	
   

  	
   

  
	
  W I T N E S S E T H:

  
	
   

  	
   

  	
   

  
	
  WHEREAS, the Company and the Employee
  (collectively “the Parties”) desire to enter into this Employment Agreement
  (the “Agreement”) as hereinafter set forth;

  
	
   

  	
   

  	
   

  
	
  NOW, THEREFORE, the Company and Employee
  agree as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  MAJOR DEFINED TERMS.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  “Annual Base
  Salary” shall be Two
  Hundred Forty Thousand dollars ($240,000), subject to annual
  review by the Human Resources Committee of the Board and may during the
  Employment Term be increased, but not decreased, to the extent, if any, that
  said Committee may determine.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  “Cause”
  shall be as defined in Subsection 4(b) below.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  “Good
  Reason” shall be as defined in Subsection 4(g) below.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  “Employee”
  shall mean Louis Bachicha.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  “Employee
  Address” is:

  	
  One Office Parkway

  
	
   

  	
   

  	
  Trinity, North Carolina 27370.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)

  	
  “Employment
  Term” shall:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  be for an initial one (1) year term commencing on the date of
  this Agreement, which term shall automatically be extended one calendar day
  for each calendar day that the Employee is employed by the Company after the
  date of this Agreement so that the remaining Employment Term shall always be
  one (1) year;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  provided that the Employment Term, as provided in Section 4
  hereof, may be terminated prior to the date specified above in this
  Subsection 1(f).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (g)

  	
  “Position”
  shall mean: Executive
  Vice President Sales.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)

  	
  “Target
  Annual Bonus Percentage” shall be thirty-five percent (35%)
  of Employee’s Annual Base Salary with a range of zero percent (0%) to seventy percent (70%) of Annual Base
  Salary.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  POSITION, DUTIES, AND RESPONSIBILITIES.
  Subject to the conditions set forth herein, at all times during the 

  
	
  Employment Term, the Employee shall:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Hold the Position reporting to the Chief Executive Officer, President
  or Chief Operating Officer of the Company (the “Chief Executive Officer”) or
  a corporate officer who reports directly to the Chief Executive Officer;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Have those duties and responsibilities, and the authority, customarily
  possessed by the Position at comparable size corporations and such additional
  duties as may be assigned to the Employee from time to time by the Board of
  Directors of the Company (the “Board”) or the Chief Executive Officer which
  are consistent with the Position at a major corporation;

  
								



 


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  (c)

  	
  Adhere to such reasonable written policies and directives, and such
  reasonable unwritten policies and directives as are of common knowledge to
  executive officers of the Company, as may be promulgated from time to time by
  the Board or the Chief Executive Officer and which are applicable to
  executive officers of the Company;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Invest in the Company only in accordance with any insider trading
  policy of the Company in effect at the time of the investment; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Devote the Employee’s entire business time,
  energy, and talent to the business, and to the furtherance of the purposes
  and objectives, of the Company, and neither directly nor indirectly act as an
  employee of or render any business, commercial, or professional services to
  any other person, firm or organization for compensation, without the prior
  written approval of the Board or the Chief Executive Officer.

  
	
   

  	
   

  	
   

  	
   

  
	
  Nothing in this Agreement shall preclude the Employee from devoting
  reasonable periods of time to charitable and community activities or the
  management of the Employee’s investment assets, provided such activities do
  not interfere with the performance by the Employee of the Employee’s duties
  hereunder.

  



 


                 3.          SALARY,
BONUS AND BENEFITS. For services rendered by the Employee on behalf of the
Company during the Employment Term, the following salary, bonus and benefits
shall be provided to the Employee by the Company:


 


	
   

  	
   

  	
  (a)

  	
  The Company shall pay to the Employee, in equal installments,
  according to the Company’s then current practice for paying its executive
  officers in effect from time to time during the Employment Term, the Annual
  Base Salary.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  The Employee shall participate in the Sealy Corporation Annual Bonus
  Plan (the “Bonus Plan”) in accordance with the provisions of that Plan as in
  effect as of the date of this Agreement based on the Target Annual Bonus
  Percentage.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  The Employee shall be eligible for participation in such other
  benefit plans, including, but not limited to, the Company’s Profit Sharing
  Plan and Trust, Executive Severance Benefit Plan, Benefit Equalization Plan,
  Short-Term and Long Term Disability Plans, Group Term Life Insurance Plan,
  Medical Plan or PPO, Dental Plan, the 401(k) feature of the Profit
  Sharing Plan and the 1998 Stock Option Plan, as the Board may adopt from time
  to time and in which the Company’s executive officers are eligible to
  participate. Such participation shall be subject to the terms and conditions
  set forth in the applicable plan documents. As is more fully set forth in
  Section 6 hereof, the Employee shall not be entitled to duplicative
  payments under this Agreement and the Executive Severance Benefit Plan.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Without limiting the generality of Subsection 3(c) above, for so
  long as such coverage shall be available to the executive officers of the
  Company, the Employee shall be eligible to participate in the Company’s Group
  Term Life Insurance Plan with a death benefit to be provided at the level of
  one and one half (1 1⁄2) times annual base salary at Company expense, plus
  extended coverage with a death benefit to be provided of at least the level
  in effect on the date of this Agreement for the Employee under such Plan at
  the Employee’s discretion and expense.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  The Employee shall be entitled to take, during each calendar year
  period during the Employment Term, vacation time equal to four (4) weeks
  per year.

  



 


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  (f)

  	
  In addition, the Parties do hereby further confirm that any shares of
  Class A Common Stock of the Company (“Class A Shares”), and any
  options to purchase additional Class A Shares previously granted to
  Employee are in addition to, and not in lieu of, any shares or options which
  may be granted under any other plan or arrangement of the Company after the
  date of this Agreement, and (b) the various stock agreements and stock
  option agreements, and any related Stockholder Agreement (the “Stockholder
  Agreement”) between the Parties (such agreements being hereinafter referred
  to collectively as the “Pre-existing Agreements”), all remain in full force
  and effect except as otherwise provided herein.  Notwithstanding the foregoing, to the
  extent that any provision contained herein is inconsistent with the terms of
  any of the Pre-existing Agreements, the terms of this Agreement shall be
  controlling.

  



 


                 4.          TERMINATION
OF EMPLOYMENT.  As indicated in
Subsection 1(b)(ii), the Employment Term may terminate prior to the date
specified in Subsection 1(b)(i) as follows:


 


	
   

  	
   

  	
  (a)

  	
  The Employee’s employment hereunder will terminate without further
  notice upon the death of the Employee.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  The Company may terminate the Employee’s employment hereunder
  effective immediately upon giving written notice of such termination for
  “Cause”. For these purposes, “Cause” shall mean the following:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  Commission by the Employee (evidenced by a conviction or written,
  voluntary and freely given confession) of a criminal act constituting a
  felony;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  Commission by the Employee of a material breach or material default
  of any of the Employee’s agreements or obligations under any provision of
  this Agreement, including, without limitation, the Employee’s agreements and
  obligations under Subsections 2(a) through 2(e) and Sections 8
  and 9 of this Agreement, which is not cured in all material respects within
  thirty (30) days after the Chief Executive Officer or the designee thereof gives
  written notice thereof to the Employee; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  Commission by the Employee, when carrying out the Employee’s duties
  under this Agreement, of acts or the omission of any act, which both:
  (A) constitutes gross negligence or willful misconduct and
  (B) results in material economic harm to the Company or has a materially
  adverse effect on the Company’s operations, properties or business
  relationships.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  The Employee’s employment hereunder may be terminated by the Company
  upon the Employee’s disability, if the Employee is prevented from performing
  the Employee’s duties hereunder by reason of physical or mental incapacity
  for a period of one hundred eighty (180) consecutive days in any period of
  two consecutive fiscal years of the Company, but the Employee shall be
  entitled to full compensation and benefits hereunder until the close of such
  one hundred and eighty (180) day period.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  The Company may terminate the Employee’s employment hereunder without
  Cause at any time upon thirty (30) days written notice.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  The Employee may terminate employment hereunder effective immediately
  upon giving written notice of such termination for “Good Reason”, as defined
  in Subsection 4(g) below.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)

  	
  The Employee may terminate employment hereunder without Good Reason
  at any time upon thirty (30) days written notice.

  



 


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  (g)

  	
  For purposes of this Agreement, “Good Reason” means the occurrence of
  (i) any reduction in either the annual base salary of the Employee or
  the Target Annual Bonus Percentage or maximum annual bonus percentage
  applicable to the Employee under the Bonus Plan, (ii) any material
  reduction in the position, authority or office of the Employee,
  (iii) any material reduction in the Employee’s responsibilities or
  duties for the Company, (iv) any material adverse change or reduction in
  the aggregate “Minimum Benefits,” as hereinafter defined, provided to the
  Employee as of the date of this Agreement (provided that any material reduction
  in such aggregate Minimum Benefits that is required by law or applies
  generally to all employees of the Company shall not constitute “Good Reason”
  as defined hereunder), (v) any relocation of the Employee’s principal
  place of work with the Company to a place more than twenty-five (25) miles
  from the geographical center of Greensboro, North Carolina, or (vi) the
  material breach or material default by the Company of any of its agreements
  or obligations under any provision of this Agreement. As used in this Subsection
  4(g), an “adverse change or material reduction” in the aggregate Minimum
  Benefits shall be deemed to result from any reduction or any series of
  reductions which, in the aggregate, exceeds five percent (5%) of the value of
  such aggregate Minimum Benefits determined as of the date of this Agreement.
  As used in this Subsection 4(g), Minimum Benefits are life insurance,
  accidental death, long term disability, short term disability, medical,
  dental, and vision benefits and the Company’s expense reimbursement policy
  The Employee within ninety (90) days of obtaining notice of Good Reason shall
  give written notice to the Company on or before the date of termination of
  employment for Good Reason stating that the Employee is terminating
  employment with the Company and specifying in detail the reasons for such
  termination. If the Company does not object to such notice by notifying the
  Employee in writing within five (5) days following the date of the
  Company’s receipt of the Employee’s notice of termination, the Company shall
  be deemed to have agreed that such termination was for Good Reason. The
  parties agree that “Good Reason” will not be deemed to have occurred merely
  because the Company becomes a subsidiary or division of another entity
  provided the Employee continues to serve in the position set forth in
  Section 2 above of such subsidiary or division and such subsidiary or
  division is comparable in size to the organization consisting of the Company
  and its subsidiaries. The parties further agree that “Good Reason” will be
  deemed to have occurred if the purchaser, in connection with the sale or
  transfer of all or substantially all of the assets of the Company, does not
  assume this Agreement in accordance with Section 11 hereof. If the
  Employee does not give a written termination notice to the Company within
  ninty (90) days of the Employee obtaining notice of such Good Reason, then
  such Good Reason shall no longer provide a basis for the employee’s
  termination of employment with the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  SEVERANCE COMPENSATION. If the Employee’s
  employment is terminated, the following severance provisions will apply:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  If the Employee’s employment is terminated by the Company other than
  for Cause or is terminated by the Employee for Good Reason, then, through the
  remaining Employment Term as specified in Subsection 1(f) hereof, (such
  remaining Employment Term is hereinafter referred to as the “Payment Term”)
  the Company shall:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  continue to pay the Employee’s annual base salary in the then prevailing
  amount and at the times specified in Subsection 3(a) hereof, or if such
  annual base salary has decreased during the one year period ending on the
  Employee’s termination of employment, at the highest rate in effect during
  such one year period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  continue the Employee’s participation in the Bonus Plan as provided
  in Subsection 3(b) hereof provided that the Company will:

  



 


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  (A)

  	
  pay the Employee a prorated bonus under the Bonus Plan for the partial
  year period ending on the date of the Employee’s termination of employment
  calculated as if the Employee had continued to be employed for the entire
  year except that the Employee’s bonus percentage (calculated at the time and
  in the manner customary as of the date of this Agreement, but disregarding
  the termination of employment of the Employee) shall be applied to the
  Employee’s annual base salary payable in accordance with Subsection 3(a) hereof
  for the partial year period ending on the Employee’s termination of
  employment; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (B)

  	
  thereafter, during the remainder of the Payment Term, a bonus equal
  to the Employee’s Target Annual Bonus Percentage, multiplied by the
  Employee’s annual base salary in the amount specified in Subsection 5(a)(i) payable
  during the year (or portion thereof) for which the bonus is being calculated;
  with such amounts being payable when bonuses under the Bonus Plan are
  customarily payable, except that the final bonus shall be payable with the
  final payment of the annual base salary under Subsection 5(a)(i) hereof;

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  continue in effect the medical and dental coverage, and any life
  insurance protection (including life insurance protection being paid for by
  the Employee), being provided to the Employee immediately prior to the
  Employee’s termination of employment, or if any of such benefits have
  decreased during the one year period ending on the Employee’s termination of
  employment, at the highest level in effect during such one year period, as
  long as the Employee continues to make the applicable employee contributions
  in effect during the Payment Term based on the most senior level contribution
  rate; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iv)

  	
  pay for executive outplacement services for the Employee from a
  nationally recognized executive outplacement firm at the level provided for
  vice-presidents of comparable size corporations, provided that such
  outplacement services will be provided for a one year period commencing on
  the date of termination of employment regardless of the Payment Term.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  If the Employee’s employment hereunder
  terminates due to the Employee’s death, disability, termination by the
  Company for Cause or termination by the Employee other than for Good Reason,
  then no further compensation or benefits will be provided to the Employee by
  the Company under this Agreement following the date of such termination of
  employment other than payment of compensation earned to the date of
  termination of employment but not yet paid. As more fully and generally
  provided in Section 15 hereof, this Subsection 5(b) shall not be
  interpreted to deny the Employee any benefits to which he may be entitled
  under any plan or arrangement of the Company applicable to the Employee.
  Likewise, this Subsection 5(b) shall not be interpreted to entitle the
  Employee to a bonus under the Bonus Plan following his termination of
  employment except as provided in the Bonus Plan which requires employment on
  the last day of the Company’s taxable year as a condition to receipt of a
  bonus thereunder for such year except in the cases of death, disability or
  retirement at or after either age 62 with ten years of service with the
  Company or age 65.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Notwithstanding anything contained in this Agreement to the contrary,
  other than Section 15 hereof, if the Employee breaches any of the
  Employee’s obligations under Section 8 or 9 hereof, no further severance
  payments or other benefits will be payable to the Employee under this
  Section 5.

  



 


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6.             SEVERANCE PLAN.  It is the intention of the Parties that this
Agreement provide special benefits to the Employee.  If at any time the Company’s Executive
Severance Benefit Plan would provide better cash severance benefits to the
Employee than this Agreement, the Employee may elect to receive such better
cash severance benefits in lieu of the cash severance benefits provided under
Subsections 5(a)(i) and 5(a)(ii) this Agreement, while
continuing to receive any other benefits or coverages available under this Agreement.  If this Agreement would provide better cash
severance benefits to the Employee than the Company’s Executive Severance
Benefit Plan, the Employee shall receive the cash severance benefits under this
Agreement, as well as any other benefits or coverages available under this
Agreement.  In such case, the cash
severance benefits under this Agreement shall be in lieu of the cash severance
benefits payable under the Company’s Executive Severance Benefit Plan.


 


7.             PLAN AMENDMENTS.  To the extent any provisions of this
Agreement modify the terms of any existing plan, policy or arrangement
affecting the compensation or benefits of the Employee, as appropriate, (a) such
modification as set forth herein shall be deemed an amendment to such plan,
policy or arrangement as to the Employee, and both the Company and the Employee
hereby consent to such amendment, (b) the Company will appropriately
modify such plan, policy or arrangement to correspond to this Agreement with
respect to the Employee, or (c) the Company will provide an “Alternative
Benefit,” as defined in Section 13 hereof, to or on behalf of the Employee
in accordance with the provisions of such Section 13.


 


8.             CONFIDENTIAL INFORMATION.  The Employee agrees that the Employee will
not, during the Employment Term or at any time thereafter, either directly or
indirectly, disclose or make known to any other person, firm, or corporation
any confidential information, trade secret or proprietary information of the
Company that the Employee may acquire in the performance of the Employee’s
duties hereunder (except in good faith in the ordinary course of business for
the Company to a person who will be advised by the Employee to keep such
information confidential) or make use of any of such confidential information except
in the performance of the Employee’s duties or when required to do so by legal
process, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) that requires the Employee to divulge, disclose or make
accessible such information.  In the
event that the Employee is so ordered, the Employee shall so advise the Company
in order to allow the Company the opportunity to object to or otherwise resist such
order.  Upon the termination of the
Employee’s employment with the Company, the Employee agrees to deliver
forthwith to the Company any and all proprietary literature, documents,
correspondence, and other proprietary materials and records furnished to or
acquired by the Employee during the course of such employment. In the event of
a breach or threatened breach of this Section 8 by the Employee, the
Company will be entitled to preliminary and permanent injunctive relief,
without bond or security, sufficient to enforce the provisions hereof and the
Company will be entitled to pursue such other remedies at law or in equity
which it deems appropriate.


 


9.             NON-COMPETITION.   In consideration of this Agreement, the
Employee agrees that, during the Employment Term, and for one year thereafter,
the Employee shall not act as a proprietor, investor, director, officer,
employee, substantial stockholder, consultant, or partner in any mattress
retailer which does not sell Sealy products or with any of the following mattress
manufacturing companies or their affiliates: Simmons, Serta, Spring Air,
Kingsdown, Tempurpedic, and Select Comfort. The Employee understands that the
foregoing restrictions may limit the Employee’s ability to engage in certain
business pursuits during the period provided for above, but acknowledges that
the Employee will receive sufficiently higher remuneration and other benefits
from the Company hereunder than the Employee would otherwise receive to justify
such restriction.  The Employee acknowledges
that the Employee understands the effect of the provisions of this Section 9,
and that the Employee has had reasonable time to consider the effect of these
provisions, and that the Employee was encouraged to and had an opportunity to
consult an attorney with respect to these provisions.  The Company and the Employee consider the
restrictions contained in this Section 9 to be reasonable and
necessary.  Nevertheless, if any aspect
of these restrictions is found to be unreasonable or otherwise unenforceable by
a court of competent jurisdiction, the Parties intend for such restrictions to
be modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.  
In the event of a breach or threatened breach of this Section 9 by
the Employee, the Company will be entitled to preliminary and permanent
injunctive relief, without bond or security, sufficient to enforce the
provisions hereof and the Company will be entitled to pursue such other
remedies at law or in equity which it deems appropriate.


 


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10.           NOTICES.  For purposes of this Agreement, all
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand delivered or mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:


 


	
   

  	
  (a)

  	
  If the
  notice is to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  Sealy
  Corporation

  
	
   

  	
   

  	
  One Office
  Parkway

  
	
   

  	
   

  	
  Trinity,
  North Carolina 27370

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mr. Kenneth
  L. Walker

  
	
   

  	
   

  	
  Senior Vice
  President, General Counsel & Secretary

  
	
   

  	
   

  	
  Sealy
  Corporation

  
	
   

  	
   

  	
  One Office
  Parkway

  
	
   

  	
   

  	
  Trinity, NC  27370

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If the
  notice is to the Employee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  At the
  Employee Address

  



 


or to such other address as either party may
have furnished to the other in writing and in accordance herewith; except that
notices of change of address shall be effective only upon receipt.


 


11.           ASSIGNMENT; BINDING EFFECT.  This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors, heirs (in the case of the Employee) and permitted assigns.  No rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred in connection with the
sale or transfer of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or substantially
all of the assets of the Company and such assignee or transferee expressly
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.  The Company further agrees that, in the event
of a sale or transfer of assets as described in the preceding sentence, it
shall be a condition precedent to the consummation of any such transaction that
the assignee or transferee expressly assumes the liabilities, obligations and
duties of the Company hereunder.  No
rights or obligations of the Employee under this Agreement may be assigned or
transferred by the Employee other than the Employee’s rights to compensation
and benefits, which may be transferred only by will or operation of law, except
as provided in this Section 11.


 


The Employee shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following the Employee’s death by giving the Company written notice
thereof.  In the absence of such a
selection, any compensation or benefit payable under this Agreement following
the death of the Employee shall be payable to the Employee’s spouse, or if such
spouse shall not survive the Employee, to the Employee’s estate.  In the event of the Employee’s death or a
judicial determination of his incompetence, reference in this Agreement to the
Employee shall be deemed, where appropriate, to refer to the Employee’s
beneficiary, estate or other legal representative.


 


12.           INVALID PROVISIONS.  Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to the extent, but only to the
extent, of such prohibition or unenforceability without invalidating the remaining
portions hereof and such remaining portions of this Agreement shall continue to
be in full force and effect.  In the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable, the Parties will negotiate in good faith to replace such
provision with another provision that will be valid or enforceable and that is
as close as practicable to the provisions held invalid or unenforceable.


 


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13.           ALTERNATIVE SATISFACTION OF COMPANY’S
OBLIGATIONS.  In the event this
Agreement provides for payments or benefits to or on behalf of the Employee
which cannot be provided under the Company’s benefit plans, policies or
arrangements either because such plans, policies or arrangements no longer
exist or no longer provide such benefits or because provision of such benefits
to the Employee would adversely affect the tax qualified or tax advantaged
status of such plans, policies or arrangements for the Employee or other
participants therein, the Company may provide the Employee with an “Alternative
Benefit,” as defined in this Section 13, in lieu thereof.  The Alternative Benefit is a benefit or
payment which places the Employee and the Employee’s dependents in at least as
good of an economic position as if the benefit promised by this Agreement (a) were
provided exactly as called for by this Agreement, and (b) had the
favorable economic, tax and legal characteristics customary for plans, policies
or arrangements of that type. 
Furthermore, if such adverse consequence would affect the Employee or
the Employee’s dependents, the Employee shall have the right to require that
the Company provide such an Alternative Benefit.


 


14.           ENTIRE AGREEMENT, MODIFICATION.  Subject to the provisions of Section 15
hereof, this Agreement contains the entire agreement between the Parties with
respect to the employment of the Employee by the Company and supersedes all
prior and contemporaneous agreements, representations, and understandings of
the Parties, whether oral or written.  No
modification, amendment, or waiver of any of the provisions of this Agreement
shall be effective unless in writing, specifically referring hereto, and signed
by both Parties.


 


15.           NON-EXCLUSIVITY OF RIGHTS.  Notwithstanding the foregoing provisions of Section 14,
nothing in this Agreement shall prevent or limit the Employee’s continuing or
future participation in any benefit, bonus, incentive or other plan, program,
policy or practice provided by the Company for its executive officers, nor
shall anything herein limit or otherwise affect such rights as the Employee has
or may have under any stock option, restricted stock or other agreements with
the Company or any of its subsidiaries. 
Amounts which the Employee or the Employee’s dependents or beneficiaries
are otherwise entitled to receive under any such plan, policy, practice or
program shall not be reduced by this Agreement except as provided in Section 6
hereof with respect to payments under the Executive Severance Benefit Plan if
cash payments of annual base salary are made hereunder.


 


16.           WAIVER OF BREACH.  The failure at any time to enforce any of the
provisions of this Agreement or to require performance by the other party of
any of the provisions of this Agreement shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement or
any part of this Agreement or the right of either party thereafter to enforce
each and every provision of this Agreement in accordance with the terms of this
Agreement.


 


17.           GOVERNING LAW.  This Agreement has been made in, and shall be
governed and construed in accordance with the laws of, the State of North
Carolina.  The Parties agree that this
Agreement is not an “employee benefit plan” or part of an “employee benefit
plan” which is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.


 


18.           TAX WITHHOLDING.  The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.  Where withholding applies to Class A
Shares, the Company shall make cashless withholding available to the Employee.


 


19.           EXPENSE OF ENFORCEMENT.  The Company shall reimburse reasonable
attorney fees and expenses incurred by the Employee to enforce the provisions
of this Agreement, even if his claims are not successful, provided they are not
ultimately determined by the court to be frivolous.


 


20.           REPRESENTATION.  The Company represents and warrants that it
is fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization.


 


21.           SUBSIDIARIES AND AFFILIATES.  Notwithstanding any contrary provision of
this Agreement, to the extent it does not adversely affect the Employee, the
Company may provide the compensation and benefits to which the Employee is
entitled hereunder through one or more subsidiaries or affiliates, including,
without limitation, Sealy, Inc.


 


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22.           NO MITIGATION OR OFFSET.   In the event of any termination of
employment, the Employee shall be under no obligation to seek other employment.  Amounts due the Employee under this Agreement
shall not be offset by any remuneration attributable to any subsequent
employment he may obtain.


 


23.           SOLE REMEDY.  The Parties agree that the remedies of each
against the other for breach of this Agreement shall be limited to enforcement
of this Agreement and recovery of the amounts and remedies provided for
herein.  The Parties, however, further
agree that such limitation shall not prevent either Party from proceeding
against the other to recover for a claim other than under this Agreement.


 


IN WITNESS WHEREOF, the Company and the
Employee have executed this Agreement as of the day and year first above
written.


 


	
   

  	
  SEALY CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jeffrey C.
  Claypool

  
	
   

  	
  Jeffrey C.
  Claypool

  
	
   

  	
  Corporate
  Vice President Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   “EMPLOYEE”

  
	
   

  	
   

  
	
   

  	
   Louis Bachicha

  
				



 


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